SUSTAINABLE HUMAN RESOURCES DEVELOPMENT (HRD)
IN STATE OWNED ENTITIES (SOEs)
IN SOUTH AFRICA
Table of Contents
GLOSSARY ................................................................................................................Error! Bookmark not defined.
1.
2.
Introduction ....................................................................................................................................................... 6
1.1.
Aim of the study......................................................................................................................................... 6
1.2.
Background ................................................................................................................................................ 6
Context .............................................................................................................................................................. 7
2.1.
The SOEs During Apartheid Period ............................................................................................................ 8
2.2.
Advantages of SOEs in a thriving economy ................................................................................................ 9
2.3.
The role of a the state in the post-1994 ANC led government ................................................................ 10
3.
The Status Quo in Critical Skills Development ................................................................................................. 14
4.
State Owned Entities (SOEs) in the knowledge-based economy (KBE) ........................................................... 16
4.1.
The Department of Science and Technology (DST).................................................................................. 16
4.2.
Department of Economic Development (DED) ........................................................................................ 18
4.3.
Department of Education (DoE)............................................................................................................... 19
4.4.
The Department of Labour (DoL) ............................................................................................................. 21
4.5.
Department of Public Enterprises (DPE) .................................................................................................. 22
5.
The Role of the Business Sector in Human Capital Development in South Africa. .......................................... 24
6.
The Roles Governance Structures within the SOE environment in South Africa. ........................................... 25
7.
6.2.
The Auditor-General and Public Accounts Committee (SCOPA) .............................................................. 27
6.3.
The Portfolio Committee ......................................................................................................................... 27
6.4.
The Board ................................................................................................................................................. 28
6.5.
The Chief Executive Officer ...................................................................................................................... 29
6.5.1.
The Role Of Human Resources/Capital Departments In SOEs .............................................................. 30
6.5.2.
The Role of the Transformation Committee within an SOE ................................................................. 31
Recommendations........................................................................................................................................... 34
7.1
Long-Term Proposals ................................................................................................................................ 34
7.1.1
Department of Public Entities (DPE) ...................................................................................................... 34
7.1.2.
National Planning Commission ............................................................................................................. 35
7.1.3. Human Resources Development Council (HRDC) and the Green Paper on Post-School Education and
Training.
....................................................................................................................................................... 37
7.1. 5
Governance Structures within the SOE environment .......................................................................... 38
7.1.5.1.
The Executive Authority (Ministerial Level) ...................................................................................... 38
7.1.5.3.
The Portfolio Committee ................................................................................................................... 39
7.1.5.4.
The Board .......................................................................................................................................... 39
7.1.5.5.
The Chief Executive Officer ............................................................................................................... 40
7.1.5.6.
Human Resources Executive ............................................................................................................. 41
7.2
Short-Term Proposals (1-10 years) ........................................................................................................... 41
8.
Conclusion ....................................................................................................................................................... 42
9.
References ....................................................................................................................................................... 43
2
ACRONYMS AND ABBREVIATIONS
ANC
African National Congress
ASGISA
Accelerated and Shared Growth Initiative of South Africa
BEE
Black Economic Empowerment
BPO
Business Process Outsourcing
BRICS
Brazil-Russia-India-China-South Africa Alliance
CEO
Chief Executive Officer
CESA
Council of Engineers in South Africa
CHE
Council on Higher Education
COSATU
Congress of South African Trade Unions
CSIR
Council for Scientific and Industrial Research
DBE
Department of Basic Education
DHET
Department of Higher Education and Training
DoE
Department of Education
DoL
Department of Labour
DPE
Department of Public Enterprises
DPSA
Department of Public Service and Administration
DST
Department of Science and Technology
DTI
Department of Trade and Industry
FET
Further Education and Training
GEAR
Growth Employment and Redistribution
HE
Higher Education
HRD
Human Resources Development
HRDC
Human Resource Development Council
ICT
Information and Communications Technology
JIPSA
Joint Initiative on Priority Skills Acquisition
KBE
Knowledge Based Economy
NCOP
National Council of Provinces
NDP
National Development Plan
3
NGP
National Growth Plan
NHRD
National Human Resource Development
NIPF
National Industrial Policy Framework
NPC
National Planning Commission
OER
Open Educational Resources
PBMR
Pebble Bed Modular Reactor
PFMA
Public Finance Management Act
PLP
Parliamentary Learning Programme
QTCO
Quality Council for Trade Occupations
R&D
Research and Development
RDP
Reconstruction and Development Programme
SAA
South African Airways
SAACE
South Africa Association of Consulting Engineers
SACP
South African Communist Party
SAICA
South Africa Institute of Chartered Accountants
SAQA
South African Qualifications Authority
SASAC
State Owned Assets Supervision and Administration Commission
SCOPA
Standing Committee on Public Accounts
SETA
Sector Education and Training Authority
SOC
State Owned Corporation
SOE
State Owned Entity
UN
United Nations
UNESCO
United nations educational, Scientific and Cultural Organisation
US
United States
USAASA
Universal service and Access Agency of South Africa
UYF
Umsobomvu Youth Fund
4
5
“The power of intellectual capital is the ability to breed ideas that ignite value.” This quote is a clarion
call to African leaders to shift purposefully and deliberately from a focus on things to a focus on
information; from exporting natural resources to exporting knowledge and ideas; and from being a
consumer of technology to becoming a producer of technology. For Africa, poverty will be reduced
when intellectual capital is increased and leveraged to export knowledge and ideas. Africa’s primary
strategy for poverty alleviation is to gain debt relief, foreign assistance, and investments from western
nations. Poverty alleviation means looking beyond 100 percent literacy and aiming for 100 percent
numeracy, the prerequisite for increasing our technological intellectual capital.”
by Phillip Emeagwali Jan 2009
1. Introduction
1.1.
Aim of the study
This concept paper is part of a larger project commissioned by the Presidential Review Committee
(PRC) in 2011. It specifically looks at sustainable human capital development within the State Owned
Entities (SOEs) targeting mainly scarce skills.
The aim is to give the PRC a broad overview of how the challenges of scarce skills can be addressed
taking into context what has been done over the years do address this issue.
1.2.
Background
In general, South Africa suffers from the inability to adequately address its human capital
development needs for a developing economy. As a result, it remains a resources-based economy
dealing with all the challenges related to the external factors such as rand-dollar fluctuations which
impact the economy unfavourably most of the time. Further on, this exposes the economy as it has
failed to develop and retain human capital and concomitant intellectual capital to leap the country
forward into a knowledge-based economy.
According to the Department of Science and Technology (DST) today, a growing percentage of wealth
in the world’s largest economies is created by knowledge-based industries that rely heavily on human
capital and technological innovation. Concurring with Emeagwali’s quotation at the opening of the
introduction, it is key that South Africa equips its citizens with a long-term view of the future needs of
the economy through the acquisition of requisite skills and knowledge that will take the country
forward.
The paper addresses these challenges in the context of state-owned entities (SOEs) in South Africa. At
the same time, the paper elaborates on why as human capital development is looked at, the focus is
6
on intellectual capital more than the resources the South Africans already have abundantly. The
paper emphasizes that a knowledge-based economy will go a long way to address poverty and many
other Millenium Development Goals as outlined by the UN.
Over above the requisite capacity at top-level - from oversight at ministerial levels to executive levels
where a section will be dedicated to address human capital needs at these levels, a further
elaboration on training and skilling individuals in many SOE’s which are by nature sector specific, is
given more attention.
Examples will be given showing that a person’s early schooling has to continue right through postgraduate education and subsequent high-level job experience gained to produce a specialist in any
given area of expertise. If this chain is threatened or broken at any point, the human potential of that
individual may be lost or diverted elsewhere. (Karar E. & Pietersen K. 2009)
The paper further outlines transformative measures to deal with the human capital/intellectual capital
challenge with the SOEs.
2.
Context
South Africa, like many developing countries, particularly its recently acquired partners, the BRIC
countries, is finding itself with myriad of challenges particularly as it negotiates itself with in the global
arena. As an economic giant in Africa with a relatively small country of 50 million citizens compared to
its counterparts like China and India with each one topping a 1 billion people, it has to set pace for
developing not only its economy but mainly its people. The legacy of the South Africa has saddled the
government with a responsibility of closing the gap between the races in terms of the wealth gap but
also in terms of human capital development.
The South African government has to deal with backlogs in the following areas, the National
Development Plan calls central challenges:
a) Too few people work
b) The standard of education for most black learners is of poor quality
c)
Infrastructure is poorly located, under-maintained and insufficient to foster higher growth
d) Spatial patterns exclude the poor from the fruits of development
e) The economy is overly and unsustainably resource intensive
f)
Widespread disease burden is compounded by a failing health system
g)
Public services are uneven and often of poor quality
h) Corruption is widespread
i)
South Africa remains a divided society
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The National Development Plan further warns of impending instability should points 1 and 2 not be
addressed as a matter of urgency. The plan further mentions the fact that failure to address all these
challenges is likely to result in economic decline, failing living standards, rising competition for
resources and social tension. This further suggests that the country’s development path has not
sufficiently broadened opportunities for black South Africans, especially women and youth.
Since 1994, apart from policy articulation, South Africa has failed to deliver economic benefits with
access to employment and/or empowerment programmes. This is no different from the era of
apartheid and colonialism as was experienced by Africans for centuries.
2.1.
The SOEs During Apartheid Period
During the apartheid years between 1948 and 1994, this period was the greatest economic boom by
the Afrikaner community in South Africa. According to Mostert, historically, the apartheid state had
enormous control over the economy.
Mostert, C. (2002) asserts that , ‘the large enterprises set up by the government gave the state a very
big influence over the economy. The public sector employed many people and was responsible for
considerable investment in the economy. The role that the state played helped empower the
Afrikaner population, especially Afrikaner business owners.’
The reasons for this boom was a well orchestrated plan of first disinfrenchasing the African people of
the rights to land, of movement, of voting and all the rights any human should enjoy. Secondly it that
was to use them as cheap labour for the benefit of the industries of the Afrikaners. Thirdly and most
importantly it was to ensure that the education the Africans received was of such inferior quality that
it would take them generations to emerge from the ruins of such dismal education.
Under these conditions, and with support from many European countries the Afrikaner economic
engine thrived and delivered great wealth and prosperity for them.
These large enterprises set up by government:
a) gave the state a very big influence over the economy
b) employed many people
c)
was responsible for considerable investment in the economy
d) empowered Afrikaners, especially Afrikaner business owners.
8
These points deal directly with the point raised by the National Development Plan and they are
therefore key for discussion throughout this paper as this touches major issues related to human
capital development. Without going into too much details about the Afrikaner model of the SOE, it is
clear that the mandate was clearly defined to benefit the Afrikaner community whilst reinvesting in
the economy. This comes close to the role of a developmental state when compared to privately
owned companies that respond to market forces.
2.2.
Advantages of SOEs in a thriving economy
In a meeting held in Hawaii between Presidents Obama of the United States and Hu of China, it was
clear that China is now on a better economic path than the US because of the growing list of China’s
SOEs on the Fortune 500 list.
President Obama ticked off a "multitude of advantages" that Chinese and other SOEs have used to
grab market share.
Lower taxes, less regulation, protected home markets or privileged access to domestic government
procurement markets artificially improve the SOEs "economies of scale, lowers their operating costs
and increases their sales, enabling them to invest in new technology that increase their competitive
advantage at home and abroad," Reuters reported on 17 Aug 2011 (Rise of China state-owned firms
rattles U.S. companies)
With such decisions as China has made for its economy and therefore its people, growing from within,
it not possible for South Africa to learn from their experiences? These are no different from the
decisions the apartheid government made for empowering its people and citizens whilst learning from
outside.
On the human capital development side, South Africa stands an opportunity to redefine the role of its
SOEs as a training ground for many of the skills the knowledge-based economy requires on a
continuous basis.
At first, as we all know, South Africa will be addressing the backlogs of the skills required in SOEs as
they gradually move themselves towards the edge of their own technologies. They will, as they move
along, focus more and more on the latest trends and requirements but this has to be a decision that is
deliberate.
The other aspect of human capital development is secondments by senior executives to partner
countries like China and India to see how these entities work in a particular area. An example of such
partnerships working might be in biotechnology/homeopathy/traditional medicines where South
Africa is already showing great potential for growth. The Department of Science and Technology can
9
partner with SOEs in India to see how best this industry can be taken further with decisive actions on
the part of government.
2.3.
The role of a the state in the post-1994 ANC led government
2.3.1. From Reconstruction and Development Programme (RDP) to ANC led government post 1994.
Just prior to the 1994 elections, the RDP document was the closest the ruling party had ever come to
pushing for developmental-type state in a mixed economy:
“Reconstruction and development will be achieved through the leading and enabling role of the state,
a thriving private sector, and an active involvement by all sectors of the civil society which in
combination will lead to sustainable growth…..
“There must be a significant role for the public sector investment to complement the role of the private
sector and community participation in stimulating reconstruction and development…
“The primary role in this regard is not the legal form that government involvement in activity might
take at a given point, but whether such actions strengthen the ability of the economy to respond to the
inequalities in the country, relieve material hardship of the majority of the people, and stimulate
economic growth and competitiveness.”
Mostert points out that the RDP presented the ruling party with an opportunity to define its position
in relation to the assets that were owned by the state even in 1994. If the debate had moved in the
direction the RDP had been positioned, it would have been easier to adopt the Afrikaner model of the
SOE’s even at that time but the government moved towards the Growth, Employment and
Redistribution (GEAR) macroeconomic framework also with valid reasons due to the limited resources
and an ailing economy then. GEAR shifted the state towards a lean and mean model where according
to this model, government should not focus on owning the assets or manufacturing enterprises.
(Mostert, C. 2002)
Rather government should focus on:

Regulating the economy rather than being owner or producer

Encourage foreign investment by providing the climate attractive to investors;

Cutting back state spending
As a result, GEAR has had an impact on government’s approach towards privatisation.
Once GEAR became the economic policy of the government, the restructuring exercises were carried
out in a number of SOEs and sectors with different reasons according to the given motivations such:
10

Finances being in inadequate to build and maintain the infrastructure;

Public sector inefficiencies with rife corruption and mismanagement leading wastage of
resources;

Promoting Black Economic Empowerment (BEE) which was going to be used as a means for
wealth redistribution through the National Empowerment Fund (NEF) which was established
solely for this purpose. In this proposal, the money in the NEF was to be used to to help small
black manufacturing companies and give historically disadvantaged communities the
opportunity to own share assets and in this way, encourage them of themselves as having a
stake in the economy. All SOEs which considered restructuring were encouraged to offer some
shares to their employees.
And, at this point, knowing the history that marginalised the blacks through education and ability to
participate effectively in wealth creation in South Africa nothing about capacity building and human
capital development was ever mentioned in the restructuring of the SOEs. Moreover, the processes to
restructure these SOEs were not mandated centrally to any legal entity that would enforce and
monitor this process to fulfil the mandate to empower the beneficiaries of BEE whatever form it
would take.
Looking back now, this was a great flaw in the model that was proposed. A lot more could have been
done to encompass the human capital development aspect in all the proposals.
2.3.2. The views by other stakeholders such as COSATU and the SACP
Whilst the government was going one direction towards the restructuring of the SOEs there were
divergent views on what role the state should play in managing the SOEs which many saw as
government assets that could be utilised for redistributive functions to close the inequalities of the
apartheid government.
Looking at failed attempts world-wide, COSATU and the SACP were opposed to the formula the ANCled government had adopted with respect to the SOEs. As an example, the SACP’s views, according to
Mostert, were as follows:
Developmental state: Privately owned companies were not going to invest major resources to
overcome the huge structural inequities in the society.
Strategic economic priorities: It was questionable whether privatised corporations were going to
maintain effective and affordable provision of services to the marginalised communities. Here the
argument for public ownership was strengthened.
11
Weak corporate governance: The role of senior management in SOEs was questioned as to whether
they had a clear sense of their responsibilities and their strategic priorities which was in essence to
balance their mandate between effective service delivery as businesses that were profitable and at
the same time ensure that the marginalised were not further pushed out by the prices charged for
these services. A huge responsibility indeed!
Further, the SACP went on to suggest a review of the restructuring process and stipulated that the
review must:

Emphasize the direction and control of the restructuring by the national government,
including the restructuring at local government level;

Ensure that the public sector government governance was competent and had to play a
leading role in reaching growth and developmental objectives;

Ensure that the SOEs were used to broaden the public sphere and rolled back the oppression
of the market forces;

Ensure full disclosure of all decisions, contracts and information in the public sector;

Ensure that the public is allowed to all meetings where crucial decisions are taken, particularly
with respect to tenders;

Ensure effective harmonisation between government departments and clarification of the role
of the relevant line departments; and

Revitalise and strengthen the National Framework Agreement so that managers do not merely
pay lip service to it or do not follow it at all.
More or less in line with the sentiments of the RDP, COSATU and the SACP were rooted in the belief
that the SOEs will deliver to the majority of the people in South Africa the same way the Afrikaner-era
SOEs did for the white population only this time in a democratic state that catered for all.
2.3.3. The “return of the state” – post Polokwane era
As the government in general, and the SOEs, in particular were showing failure to meet their
mandates, continuously draining the coffers of the state with poor management and incapacity to
cater for the majority, pressure was building up for the previous government to find sustainable
solutions to the challenges pointed out earlier. The SOEs were constantly seeking bail-outs from
government with little to show on the profitability side and service delivery at large. Cases like ESKOM,
Transnet and SAA and others were cited as examples of executives who did not understand their
mandates and some became ‘too big’ for their boots as they repeated demanded huge salaries and
bonuses in spite of poor management.
12
At the same time, the world economy was undergoing serious challenges that started begging
questions as to the viability of the market-driven economies. South African found itself shielded from
this world turmoil and that gave impetus to the proponents of public ownership of state assets as it
was the protectionist agenda, albeit minimal, that helped South Africa ride the storms of the recent
economic upheaval.
It was again these sentiments that called for the return of the state at the Polokwane conference by
the ruling party with partners like COSATU and the SACP at the helm of the ensuing changes that
South Africa is currently experiencing.
The sentiments and questions that were raised in the RDP discussion documents are finding their way
back into the fold regarding the ownership, management and the mandates of these SOEs.
Pillay, succinctly points it out as the ‘return of the state’ after the turmoil experienced with the global
economy in recent years. In the same context he defines the developmental the state as a state that
derives its political legitimacy from its record in economic development, which it tries to achieve
mainly by means of selective industrial policy.
In South Africa, a simple interpretation will be a state that meets the socio-economic needs of the
majority . He further says that the role of the SOE’s in this context of a developmental state will be
dependent on:
a) how they conduct their operations
b) how they understand their mandates
c) what their governance, leadership and management structures look like
d) what staffing and procurement practices are evident
e) what the nature of their strategic partnerships look like and last but not least
f)
what investment is made in human capital and technology.
It is important to note at this stage that human capital is not being given attention as end unto itself.
The human resources departments can play a much bigger role in transforming the organization to
more inclusive workplaces taking into consideration the past South Africa from which it is slowly
emerging.
Through clearly defined mandates, management and inclusive human capital development it is the
only means by which sustainable economic development goals can be achieved. It is also the only
means that will take any country towards a knowledge-based economy particularly if it is intertwined
with science and technological innovations as will be discussed in detail later on in the paper.
If this sentiment below were to outline the sentiments of the new government and at the same time
support the policies by both the department of education and department of science and technology
13
that if we are to move towards a knowledge-based economy we have to invest heavily in appropriate
human capital strategies, the questions come up as to how that can be achieved in the SOEs?
‘The large enterprises set up by the government gave the state a very big influence over the economy.
The public sector employed many people and was responsible for considerable investment in the
economy. The role that the state played helped empower the Afrikaner population, especially Afrikaner
business owners.’
3. The Status Quo in Critical Skills Development
According to Mukora, J (2008), there are different perspectives attached to the term skills shortages.
This report uses the definition of a skills shortage from Shah, C. and Burke, G. (2003):
A skill shortage exists when the demand for workers for a particular occupation is
greater than the supply of workers who are qualified, available and willing under
existing market conditions.
A distinction is made between the concepts of skills shortages with recruitment difficulties
and skills gap. Recruitment difficulties refer to the situation where a business finds it difficult
to fill a vacancy in spite of an adequate supply of skilled workers. This may be due to the
characteristics of the business, location, remuneration being offered, poor working conditions
or the skill set required for the position. Skills gap occurs when existing staff at a given
company or industry do not have the skills for the required positions.
Taking an example from the engineering sector alone, it is clear that more has to be done to increase
the volumes of our outputs when it comes to critical areas skills like engineering and technicians to
grow the economy that will be competitive in the world.
According to Lawless, A. (2005) in her Numbers and Needs, published by the South African Institution
of Civil Engineering (SAICE), between 4 000 and 6 000 additional civil engineering professionals are
required in South Africa if our economy is going to grow at an acceptable. South Africa’s ratio of
engineers to population is a major challenge as we are behind our counterparts like India and Brazil.
As witnessed from the table below, our ratio of engineers to the population is too low. A comparison
with other developing and developed countries suggests that we are far behind. We will need to
produce engineers and technicians at more than ten times the ratios we are doing currently just to
catch up.
14
The table below is an extract from the table comparing many countries:
Country
Brazil
China
India
South Africa
UK
USA
Ration of Population
per engineer
227
130
157
3166
311
389
Western Europe and North America which have an average of 150 to 300 people per engineer. When
we look at our service delivery needs in the country, it is clear that an urgent programme will have to
be initiated to start dealing with the scarce skills challenge in our hands.
The most recent statistics of registered professionals in South Africa is as shown below:
CATEGORY
Professional Engineers
Candidate Engineers
International Professional Engineers
Professional Technologists
Candidate Technologists
Professional Technicians
Candidate Technicians
Professional Certificated Engineers
Candidate Certificated Engineers
Registered Lift Inspectors*
Registered Lifting Machine Inspectors*
NUMBER
14 474
4 330
19
3 244
1 357
1 887
1 745
998
184
160
556
Registered Engineering Technicians+
936
Registered Eng Technicians(Master) +
441
Total
30331
Note: * Specified Category + Categories defined in previous Act, now
Source ECSA Annual report 2008/09
As the numbers suggest, there is also a need for a clear strategy and plan to address the necessity for
the training of qualified technicians, technologists and engineers in order for them to gain meaningful
experience that they can use to improve the condition of road infrastructure and other infrastructure
in the countries in Africa. The same applies to ‘road builders’, we are losing the skills as the ‘old guys’
are getting to a stage where they can no longer do much. However, it is not too late as we can use
them to impart knowledge and experience to the young entrants into all streams of engineering.
15
4. State Owned Entities (SOEs) in the knowledge-based economy
(KBE)
As earlier discussed, if it is understood that through clearly defined mandates, well-equipped
management and inclusive human capital development this is the only means by which sustainable
economic development goals can be achieved in any corporate environment and in the long run, then
it should be understood that assets like the SOEs can equally play a critical role it taking the country
towards a knowledge-based economy which is intertwined with science and technological innovations
which they were capable in doing during the apartheid years.
4.1.
The Department of Science and Technology (DST)
In understanding the challenges South Africa faces in the future with respect to preparing for a
knowledge-based economy, DST asserts that by committing to growing the base of scientists,
engineers and related skills, both in in general and in areas offering the most economic potential over
the long-term, South Africa is investing in human capital that will serve its needs well into the future.
(DST, p9). The knowledge-based economy rests on four interconnected and interdependent pillars:
a) Human capital (education)
b) Knowledge generation and exploitation (R&D/ Innovation)
c) Knowledge infrastructure (information)
Enablers to address the ‘innovation chasm’ between the research results and socio-economic
outcomes (economic and institutional infrastructure) (DST, 2008 piv, p3)
South Africa will have to use all the means possible to deal with the main pillar, human capital
development. This is a critical link to all other pillars as if forms the base for creating for knowledgebased economy. This will ultimately lead to a full recognition of the role of knowledge and technology
in economic growth.
With South Africa having to acknowledge the disparities in the education system that was racially
biased, it is evident at this stage that the higher rung of the beneficiaries of a better education system,
the whites, stand to benefit a lot more that the majority of South Africans ever will. It is for this reason
that the SOE’s will have to used as a means to recapture as many as possible those who have been left
out of the loop through re-skilling and giving them exposure to what is available in the market.
16
South Africa will also have to find means to open doors through partnerships with the BRICS partners
to expose the educated to research opportunities that may allow them grow ideas that will benefit
our economy.
As our research base is still very small in South Africa, a lot more within the SOEs in partnership with
their industry partners will have to be done and monitored to ensure continuity in each sphere of
expertise.
The Department of Science and Technology has gone a long way to define areas of expertise South
Africa in which can position itself as future leaders. In what DST calls the grand challenges outlined in
their 2008-18 plan their proposal addresses an array of social, economic, political, scientific, and
technological benefits. They are designed to stimulate multidisciplinary thinking and to challenge our
country’s researchers to answer existing questions, create new disciplines and develop new
technologies.
The outlined grand challenge areas are:
• The “Farmer to Pharma” value chain to strengthen the bio-economy – over the next decade South
Africa must [and can] become a world leader in biotechnology and the pharmaceuticals, based on the
nation’s indigenous resources and expanding knowledge base.
• Space science and technology – South Africa should become a key contributor to global space
science and technology, with a National Space Agency, a growing satellite industry, and a range of
innovations in space sciences, earth observation, communications , navigation and engineering.
• Energy security – the race is on for safe, clean, affordable and reliable energy supply, and South
Africa must meet its medium-term energy supply requirements while innovating for the long term in
clean coal technologies, nuclear energy, renewable energy and the promise of the “hydrogen
economy”.
• Global climate change science with a focus on climate change – South Africa’s geographic position
enables us to play a leading role in climate change science.
• Human and social dynamics – as a leading voice among developing countries, South Africa should
contribute to a greater global understanding of shifting social dynamics, and the role of science in
stimulating growth and development.
With these grand challenges as a base from which to target our growth in South Africa, there is an
opportunity to use existing SOEs already in these industries to grow future economies in these areas.
If the SOEs are to operate as key engines of the economy, they will have to adopt the new
17
technologies that will allow them to even dictate where our economy will go but they will have to
have leadership and the will to invest in these sentiments.
There a great opportunity to link with BRICS partners in these areas so as to leverage what South
Africa already possesses for future developments. As the Stephanie Landers of BBC News pointed out
on 28 November 2011, ‘it's not just economic power that has shifted from West to East in this crisis.
The global balance of respect has shifted as well.... There's no getting around it, the BRICs have come
out of the global financial crisis remarkably well, especially China, whose diplomatic skills at the recent
G20 Summit in Cannes impressed all who were there and left the American delegation rather
nervous.’
For South Africa not to capitalise on the relationship with the fastest growing economies in the world
will be a missed opportunity in that they have traversed routes of inequalities in their backyards such
as Brazil is doing but at the same are rising to the challenges of globalising their economies at the
same time.
4.2.
Department of Economic Development (DED)
The Department of Economic Development, which was established in 2009, assumed responsibility for
coordinating government's work on the Framework for South Africa's response to the International
Economic Crisis. The department is also responsible for developing economic policy with broad, crosscutting focus so that macro- and microeconomic policy reinforce each other and are both aligned to
the electoral mandate.
The department is responsible for economic development planning and works with other departments
to ensure coordination around a programme that places decent work at the centre of government's
economic policies to secure better employment outcomes.
4.2.1. Economic Policy Development
The department has identified a number of areas with the potential for new jobs. These are:
•
•
•
•
•
•
•
•
infrastructure development
the green economy
the manufacturing sector
knowledge-economy activities
the rural, agriculture and agroprocessing sector
tourism and business process services
the social economy, which includes cooperatives
public-sector growth
18
• the continental and regional economy
An important policy focus for the department will be the creation of sustainable livelihoods and
addressing the challenges of enterprises in the Second Economy. Will the policy align itself with the
sentiments of the knowledge-based economy or will it straddle both the resource-based economy and
the knowledge-based economy at the same time? Where will the emphasis lie, considering the
realities of first and second economies?
The department has established the Ministerial Advisory Panel, which will serves as an ideas forum. In
this forum, it is not quite clear whether ideas of DST and DED do indeed talk to one another.
Another area of importance is how each ministry intends to carry out the mandates given to them as
this will help align the processes and resources government may put behind the projects to take us to
knowledge-based economy as dictated to us by the global forces.
4.3.
Department of Education (DoE)
4.3.1. Education and the economic system of South Africa before 1994
According to Rita Byrnes, 1996 During the 1960s and 1970s, per capita spending on white pupils was
about ten times greater than educational spending on black pupils. By the early 1990s, the gap had
been reduced by half, but in general, standards for teacher qualifications and facilities in black schools
continued to be inferior to those in white schools. (Rita, M. Byrnes, 1996)
The economic costs of implementing and enforcing apartheid sky-rocketed in the 1980s. Black poverty
deprived South African businesses and manufacturers of a sizable domestic market. Even more
ominous for the future, it became clear that South Africa lacked the necessary skilled personnel to
maintain growth in its manufacturing enterprises, and millions of South African workers were
unqualified for anything but the lowest-paid jobs.
South Africa's Education Foundation, a respected private research organization, estimated in 1991
that unemployment among unskilled and uneducated workers would increase during the 1990s, and
that at least 500,000 skilled jobs and managerial positions were likely to remain unfilled, unless
foreign workers were hired to fill them. The government's National Manpower Commission confirmed
these bleak estimates in 1992, adding to the political pressure to end apartheid, especially in
education.
19
The interlinked challenges of economic recovery and educational reorganization presented the new
government with an intractable dilemma in 1994. Educational reform would require significant
increased spending in an expanding economy, but, at the same time, economic growth would require
a more highly skilled work force and educational reforms. The government approach to these
challenges was deliberate and careful, and attempted with foreign donor assistance to convince those
who were uneducated and unemployed that some of the benefits of ending apartheid would be seen
during their lifetime. Officials sought international assistance in providing on-the-job training for
workers in many industries and in speeding the pace of reforms, but by late 1995, only a few new
programs were being implemented.
‘The growing complexity of the workplace…. has put the question of HRD at the heart of
contemporary public policy and development strategies. Developments in the global context make it
imperative for all countries to respond effectively to the dynamic and competitive forces that impact
on how national economies relate to the global economy.’(HRD-SA 2010-2030)
4.3.2 The role of Education as the coordinator
It was reasons that the Minister Nzimande announced recently that, “South Africa’s universities and
research bodies must help to broaden and develop skills of students and people in other organisations
[SOE’s suggested] in order to change South Africa from a resource-based economy to a knowledgebased economy.”
This pronouncement by Minister Nzimande suggests that there is acknowledgment of the fact that
resource-based economies are facing challenges that are now pushing us to look for answers in
knowledge-based economic models. Implied in this statement is that higher education becomes
critical in taking the country forward to the knowledge-based economy.
The Department of Education plays a central role in bringing all parties together on the way forward
to tackle skills shortage in all fronts. With an intent to take the lead in skilling South Africa at all levels,
it is imperative that they see how best to equip ourselves through human capital development
programmes can take a lead I sending or inviting the BRIC partners around table for implementing
measurable outcomes through exchange programmes to skills ourselves for the KBE.
First, as a custodian of human capital development from schools levels up to tertiary levels. Second, as
a main infrastructure supporter of the type of education the country requires to take us into a
knowledge based economy and third, as the department together with DST can take the country to
the edge of the knowledge required to facilitate these changes at a larger scale than any other
department.
20
This Human Resource Development Council of South Africa (HRDC), under the stewardship of the
Department of Higher Education has committed to:
• urgently overcome the shortages in the supply of people with the priority skills needed for the
successful implementation of current strategies to achieve accelerated economic growth,
• increase the number of appropriately skilled people to meet the demands of our current and
emerging economic and social development priorities, and
• ensure improved universal access to quality basic education and schooling (up to grade 12) that is
purposefully focused on achieving an improvement in education outcomes for the poor, and on
equipping learners to pursue post-school education, including vocational education and training, or
employment; and urgently implement skills development programmes that are aimed at overcoming
poverty and unemployment.
Last but not least, their priority is to accelerate the number of new training graduates in priority
economic sectors as identified in ASGISA, the NIPF and IPAP.
What the Department of Education can further do is to create fundamental links with the Department
of Labour through programmes like JIPSA as discussed in the next section of the paper.
4.4.
The Department of Labour (DoL)
The Joint Initiative on Priority Skills Acquisition (JIPSA) – a multi-stakeholder driven process – was
established in March 2006 and was tasked with the responsibility of addressing the supply of scarce
and critical skills so as to meet the objectives of the Accelerated and Shared Growth Initiative (AsgiSA).
JIPSA faced a rather daunting task of having to almost coerce various constituencies, especially
government departments, to begin to work together to address the delivery of skills.
According to Mukora, J. (2008), one major achievement by JIPSA is that it managed to put skills
higher up on the political radar with an attempt being made to provide focus and play a cocoordinating and convening role. It achieved this as well as ensuring the reprioritization of funding for
the delivery of skills such as in relation to artisans.
Some progress made but in view of the fact that JIPSA is not an implementation agency, it was only
able to give guidance on how departments and other structures and institutions should proceed.
JIPSA’s target on artisans was to increase training output to 50 000 between now and 2010, meaning
21
that the country had to train about 12 500 artisans per year, or an additional 7 500 new artisans each
year.
To put this figure into perspective, a total of 36 703 apprenticeships were registered in the period
from April 2000 to March 2005 in the two routes (S13 and S28). For this to be there had to be a
common ground and understanding on creating coherence and certainty on the four routes to
artisan development proposed by the Department of Labour.
For example, it was understood that a lot could still come from the further education and training
(FET) college route through an internship or skills programme although it was a challenge that colleges
were and are still not producing the quality of artisans that industry requires, which is why so few
graduates are absorbed immediately into the labour market. Unemployed graduates or college
learners who are engaged in basic technical and trades courses can be put into accelerated
programmes.
Opening up other underutilized training facilities around the country might help and be used for skills
training programmes. Based on the success achieved by the Seifa initiative, the Manufacturing
Engineering and Related Services education and training authority (Merseta) approved the
accelerated training model, and funded a pilot project to train 650 artisans in 14 metal engineering
trades and 650 artisans in automotive trades (Engineering News, 11 October 2007).
Seifsa is an agency that has developed the accelerated artisan training model at the Fundi training
centre since 2005. The Fundi accelerated artisan-training model targets apprentices who have
completed theoretical training at FET colleges.
After 80 weeks of training, the apprentices are ready to undergo their trade test. Under this
accelerated programme a total of 69 artisans have been trained to date. Although the figure is still
low, it is a pointer in the right direction.
For SOE’s initiatives like Seifsa give an opportunity to collaborate where they are short of skills in their
academies.
4.5.
Department of Public Enterprises (DPE)
According to DPE’s definition of SOC’s or SOE’s as we have been discussing them,
22
“The State Owned Companies (SOC), are strategic instruments of industrial policy and core players in
the New Growth Path. The department aims to provide decisive strategic direction to the SOC, so that
their businesses are aligned with the national growth strategies arising out of the New Growth Path. It
will do this by ensuring that their planning and performance, and investments and activities, are in line
with Government medium term strategic framework and the Minister’s service delivery agreement.”
In line and in the similar as that of the current administration in education, as far back as 2005, in the
Strategic Plan 2005-2008, by the Ministry of Public Enterprises , there was acknowledgment that the
SOEs carry a great deal of potential to ‘enhance the quality and quantity of skills in particular in areas
of education and training.” It was for this reason that the Joint Project Facility (JPF) was established in
order to pursue cross-cutting projects two of which are critical in our discussion. Amongst such
projects were the following:






Continental investments
Energy and Pipelines
Human Resources and Capacity Building
Information Communication Technology
Properties
Optimisation
The Ministry saw that targeting the Human Resources and Information Communication Technologies
would go a long way to enhance skills development amongst the SOEs as a collective. It was for this
reason that BPOs (Business Process Outsourcing) were going to be established in partnership with the
Department of Education’s Further Education and Training Colleges (FETs). It was envisioned that
these would work closely with Umsobomvu Youth Fund (YUF) to provide funding for learnerships for
the newly recruited call centre operators in this pilot project.
This Joint Project was going to start forming a base for prioritizing, delivering and developing a range
of critically important technical, technological and high-level engineering skills that would enhance
and extend the capabilities of the SOEs.
The project was also going to assess current SOE training capabilities and look for synergies between
the SOEs and opportunities for further collaboration with each other and other educational
institutions such as FETs. In the current Strategic Plan 2011-2014, the following priority areas have
been aligned as follows:

Contribution to the New Growth Path
o
o
o
o
Skills Development
Transformation
Youth Development
Procurement Leverage
23

Driving the African Agenda

Local and Provincial Economic Development
The programmes of human resource development in the Department of Public Enterprises look at
establishing partnerships between the SOEs, FETs and industry in support of artisan development. This
time, the skills development deliverable has been mooted to be included in the shareholders’s
compact between Minister and the Board. This show that South Africa is moving closer to taking the
issue of skills development, of scarce skills, more seriously.
At higher levels, suggestions for Management Learning Programmes at UCT Graduate Business School
have been put on the agenda to develop what has been called specialized skills to facilitate improved
SOE performance management and at the same time, Parliamentary Learning Programme (PLP) has
also been suggested for hosting of annual PLP for the Portfolio Committee on Public Enterprises and
National Council of Provinces (NCOP) Select Committee for Labour and Public Enterprises. These
measures will go far to address and highlight the skills development across all the functions of role
players in the SOEs.
5. The Role of the Business Sector in Human Capital Development in
South Africa.
Interviews and a literature review reveal done by Mukora, J. (2008), it was clear that most business
has sought to get rid of the expense for training and more importantly, the implied cost of paying for
skills. According to Mukora, this appears to be shortsighted when it comes to training and during
boom periods resorted to importing skills as a stopgap. In the future, this option might prove
increasingly more difficult in view of the global demand for artisans.
It should be noted that whilst in the past, SA was only an importer of skills; this is no longer the
case. SA artisans are currently working on projects in Russia, China and the Middle East while
thousands have immigrated to Australia and elsewhere. These developments could impact on the
costs of doing business in SA.
This increased global competition for artisans has resulted in unpredictable and shorter contract
cycles. This has introduced uncertainty about the future, which makes employers reluctant to enter
into the 3-4 year contracts involved in the employment of apprentices. Apart from not having the
24
capacity to carry the additional costs, they do not want to have to put them off if contracts do not
eventuate (Marshman 1996). The move to shorter contract cycles (for example in the case of
the new learnership contracts) reflects the introduction of ‘lean production’ production
techniques aimed at reducing a firm’s cost and risk (Harrison 1997).
6. Governance Structures within the SOE environment in South
Africa.
In South Africa the SOE’s operate in an environment faced with several economic challenges. In the
Strategic Plan 2011-214 by the Ministry of Public Enterprises (DPE) acknowledges the need to:




Accelerate the growth rate to create wealth that enhances the standard of living for all South
Africans;
Dramatically increase employment creation in the formal economy;
Develop capabilities to decrease the country’s dependence on commodity exports and
enhance the current account deficit;
Transform the ownership and management profile of the economy to reflect that of the
broader South African population.
In light of the challenges highlighted above, the role of the SOEs articulated and their responsibilities
discharged through different stakeholders to ensure that they deliver their mandates accordingly.
The Protocol on Governance Oversight Role Over State Owned Entities (SOEs) dated 25 November
20005)] states the following:
According to the Parliament and because the SOEs are the property of the state, there are
responsibilities charged to different role players to ensure the smooth running of the SOE’s. Whilst
this paper will not go into detail as to what each role player is tasked with, it will highlight key areas
that relate to the problem statement at hand. The following are key participants in the running of the
SOE as follows:
6.1.
The Executive Authority at Ministerial and Departmental level
As the ultimate authority to direct and manage SOEs lies with Cabinet, they also decide on the
appropriate and desired policies to meet the mission and mandate of the country and therefore the
SOE’s. The responsibility is then charged through the elected Minister to carry out the mandate from
25
policy through the Department and then to the relevant SOE for implementing and delivery against
the policy.
It is the Minister through the relevant Department that the necessary structures, processes, practices
and business activities are put in place within the SOE to implement and deliver on the given policy
mandate. Thereafter, the same department, on a quarterly basis, according to Treasury Regulation
30.2 will have to monitor, review and oversee that service delivery has been achieved in line with the
agreed upon outputs.
This is done through a corporate plan and the shareholder’s compact with the SOE. The shareholder’s
compact but mainly the corporate plan over three years covers the following:

Strategic objectives and outcomes identified and agreed on by the executive authority in the
shareholder’s compact;

Strategic and business initiatives as embodied in the business function strategies;

Key performance measures and indicators for assessing the entity’s performance in delivering
the desired outcomes and objectives;

A risk management plan;

A fraud prevention plan;

A materiality/significance framework, referred to in Treasury Regulation 28.3.1;

A financial plan addressing –
-
Projections of revenue, expenditure and borrowings;
-
Asset and liability management
-
Cash flow projections
-
Capital expenditure programmes and
-
Dividend policies (where applicable)
It is important to note that as main the outline of the corporate plan is silent on the pressing issue of
human capital development considering how dire the situation is in all areas expertise in South Africa.
As suggested in the sections below, the human capital issue should be elevated to the level of the
PFMA if any strides will to be made in addressing scarce skills shortage.
26
More has to be done at this level to ensure that the shareholder compact to the board includes all
elements outlining the mandate pertaining to human capital development to job creation for SOE. In
addition, mechanisms to monitor performance must be equally enhanced.
6.2.
The Auditor-General and Public Accounts Committee (SCOPA)
While the role of this committee is clearly focused towards financial audits and controls to a large
extent, a great deal can be done to review some conditions to enable the PFMA deliver services much
faster.
Since the PFMA has been put in place, justifiably with a reason to safeguard the public funds against
any form of abuse, the PFMA has in itself paralysed government as the officials are reluctant to bypass
or even execute the very services that are meant to uplift the communities.
There has not been enough attention given to non-financial deliverables like human capital
development by this unit. More can be done by the auditor-general and SCOPA to hold Heads of
Departments accountable for this aspect of their key performance areas.
6.3.
The Portfolio Committee
The portfolio committees play a role in monitoring the non-financial aspects of the SOE. They also
ensure that the service delivery mandate is adhered. However, together with SCOPA the portfolio
committee can become a powerful watchdog because with their strength combined their mandate is
in even more effective as their mandate covers a complete picture of an SOE’s performance
encompassing its finance, its systems and its human resources and its service delivery performance.
With human resources under the scrutiny of the portfolio committee, there is another opportunity for
the members of this committee to put more emphasis on this pressing matter of human capital
throughout all the SOE’s so as to prioritise this matter at parliamentary level. Our future, more than
finances, depends on it. Because of the urgency and strategic importance of human capital in the
broader context of the economy and South Africa being in a position to redefine its developmental
agenda, this matter should be put at the same level as the PFMA if we are to make any strides at all.
Here at the portfolio committee level, there is an opportunity for activist portfolio members to force
the non-compliant executive members to see service delivery as key to the stability in the country. If
that fails, they have to powers to change them.
27
In recent months, with the emphasis moving more towards the service delivery performance as in the
case of the Department of Communications tasked with the digital migration mandate which is left
with less than 18 months to go before switch over date, the portfolio committee took the minister to
task. The intervention by the portfolio committee saw the removal of the minister from his position to
another portfolio.
Whilst it is not the norm to remove ministers, there is a silent impatience that seems to be cascading
down from the top to ensure that the citizens are protected from non-compliant executives.
6.4.
The Board
The Board of the SOE is appointed by the relevant Minister who has powers to appoint and dismiss a
non-performing board. The Board is ultimately responsible to the shareholder for the performance
and the affairs of the SOE.
The main role of the board is to fulfill the mandate of the SOE in accordance with the strategic
objectives of the government whilst achieving the commercial objectives as set out at Cabinet. In the
case of human capital development as a key aspect of this paper, the Board is equally responsible for
seeing to it that the SOE not only equips the staff with requisite skills at all levels but it also ensure
that the SOE stays at the edge of technology and knowledge that will thrust it forward into the future.
As it is done for financial planning, more will have to be done to ensure that human capital planning is
given its own board committee where human capital is given attention from school level in
partnership with industry partners as pointed out earlier in the paper. The board can also make
recommendations to the executive authority on the plans that might allow South Africa look at
establishing a relevant academy for the skills that the SOE see as dire.
The board has a responsibility beyond the offices of the SOE in terms of the management of
stakeholders both present and future with regard to the services, products, clients, lenders and
employees.
It is the board that will ensure that the transformation agenda, both at board and executive levels, is
adhered to if the agenda of the developmental state is to be fulfilled. They know how far the SOE can
go to include the excluded and what resources could be confined for that purpose.
28
6.5.
The Chief Executive Officer
As outlined in the Governance Oversight Role Protocol, the role of the Chief Executive Officer(CEO) in
the SOE is stated as follows:
“Unless otherwise agreed in the shareholder’s compact, the Executive Authority should appoint the
CEO whose role should, preferably, be separate from that of the chairperson. The Executive Authority
should consult with the Board about its preferred candidate for the position of the CEO and provide
enough time for the Board to consider the candidate and respond prior to an appointment being
made. The CEO’s role should focus mainly on the operations of the SOE, ensuring that the SOE is run
efficiently and effectively and in accordance with the strategic decisions of the Board. The CEO is
accountable to the board.”
With the regard to human capital development, the CEO is responsible for this critical function within
the organization. Apart from succession planning, staff retention and organizational development at
large through staff capacitation, it is the duty of the CEO is responsible for ensuring that the
organization is at the edge of its technologies through ensuring that the best people ‘fight’ to be part
of his/her organization. In fact, it is equally important to understand that those people may not even
be available in the country.
The CEO in partnership with the Board must be bold enough to confront the Executive Authority with
suggestions and recommendations of how that SOE can source skills internationally and find
mechanisms to grow them within the organization. Knowledge-based approaches to economic
development are boundary-free and those means could be exploited and used to enrich the SOE and
its people.
Again, the partnerships with BRIC (mainly, Brazil, China and India) countries could prove cheaper than
traditional sourcing of Western technologies that maybe prohibitively expensive and yield much less
for our needs.
What the East can teach us is that the application of technology to our situations means being able to
adapt those technologies to our day-to-day needs within our communities to make sure we take along
as many people as possible into the future and into the mainstream of the economy. Opportunities for
community-based utilization of the SOEs lie in this space.
The CEOs with this view will be the most appropriate considering that there is large gap between the
haves and the have-nots in South Africa.
29
6.5.1. The Role Of Human Resources/Capital Departments In SOEs
In SOEs like in most companies throughout South Africa, human resources departments are charged
with an unenviable task to change not only the complexion of South Africa’s workplace but also to
ensure that the workplace practices of do not rob the majority of the country of a place that feels like
home. South Africa’s workplace continues to white dominated in thought and in practice.
Letsoko, warns that South Africa’s diversity strategies are slow and pose a danger to our democracy.
He says that ‘sensitivity around diversity in South Africa had led to the phenomenon of political
correctness which mostly applies to white South Africans. (Letsoko, S. 2011)
He suggests that his political correctness has led us to avoid dealing with painful issues that must
emerge if we should take South Africa forward. As we all know, the organizational culture in South
Africa is very Eurocentric and most South African cultures including the black cultures, do not operate
from the periphery. Diversity treats these cultures as visitors that come once in a while for
celebrations on specific days and life goes on afterwards.
Letsoko in quoting Pierre Bourdieu who refrred to this phenomenon and ‘symbolic violence’ which he
says constitutes an ideological act of misrecognition.
In the SOE’s the same warning must be heeded because these institutions belong to a democratic
state which recognizes a right for respect for all.
It however goes further than that. The SOE’s are not supposed to change the colour of the face of the
organization, meaning, increasing the number of black faces. Entrenched in the change of faces should
be the change of culture within the organization. This avoid a revolving door syndrome seen in many
organizations where change is being undertaken.
In supporting the role of the developmental state within the SOE’s, the new management and staff
that comes in should also realize their role to include the excluded through their programmes. This is a
key transformation issue of the human resources department within these state owned entities.
Within the human resources department, over and above the regular mandate of acquiring the staff
to perform the duties assigned to the SOE, the executive in charge should prioritise and coordinate the
activities of the transformation committee (chaired by the CEO). The Transformation Committee will
be charged with ensuring that the change processes to include the excluded are enforced and the
performance of the members (selected from each unit in the SOE) of the committee should be
measured against these transformation objectives and not just changing the complexion of the staff in
their units.
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6.5.2. The Role of the Transformation Committee within an SOE
The transformation committee is the engine for change within any large organization. Once the vision
is clearly articulated, the transformation committee, led by the CEO in partnership with the executive
team, she/he must work to produce a blue-print of how the changes will take place. Without a clear
view of where the organization is going, change can take any form – leading to confusion and
despondency amongst the staff.
Affirmative action as corrective measure to change the demographics within the organisation is not
only an economic imperative but also a moral one in light of the disparities companies still face in
terms of their representation. To implement affirmative action will ensure that government is taking
concrete steps towards redress issues within its own companies. There cannot be any apology about
that. Calls for scrapping affirmative action will grow louder as government shows reluctance to do the
right thing. For many who have been privileged in the past, affirmation action represents what they
now know will be a point of no return. It only remains in the hands of those in charge to understand
and carry out the mandate for change.
Although we all know that change is slow, there can still be quick wins that can be gained by mapping
out short-term and long-term strategies that will ensure continuity in the supply of those with the
skills most required within the organisation.
Two examples of what change means have been cited for comparison. The SAICA which targets
primarily numbers and the SAACE which has gone further in articulating its position about change.
According to the South African Institute of Chartered Accountants (SAICA) the primary role of their
transformation committee is to facilitate the entry of designated groups, as defined by the
Employment Equity Act, into the profession through the implementation of equity development
projects so as to ensure that the membership of SAICA will eventually reflect the demographics of the
South African population. The committee delivers on its mandate through specific interventions at
each and every level as described in the diagram below:
31
Although short in articulating the societal impact of their outputs as a transformation committee,
because they are only dealing with numbers, this particular model, for SAICA has been lauded for its
success as it brings in the youth at school levels although the numbers are still far too low in terms of
outputs. The power of this model, however, lies in that they induct the youth at school levels and
interests them in accounting as a profession.
The youth join the Trainee Induction programmes early so that they are nurtured throughout their
growing years in the profession which is what Karr et tal, suggest in their approach to creating seed
from which grow the future dedicated professionals. (Karar E. & Pietersen K. 2009)
As a case study, which has been chosen deliberately for the purposes of this paper, the South Africa
Association of Council of Engineers (SAACE), a member of the Council of Engineers in South Africa
(CESA), like many organizations, recognizes that in the history of South Africa many people were
disadvantaged by being forcibly excluded from the economic mainstream of the country and had to
endure extreme deprivation as a result.
SAACE further articulates that the resulting inequalities and imbalances are to be addressed through a
proactive strategy for change aimed at expediting the integration of the disadvantaged fully into the
society and the economy.
For the purposes of this paper, the issue of the society within which the organisation conducts its
business will refer to affirmative action (deliberately hiring those who are underrepresented
according to the demographics) and the issue of the economy would refer directly to economic
empowerment to support the integration of the marginalized into the economic mainstream.
This powerful statement of departure by SAACE looks at both spheres for change – the society and the
economy. This opens up an opportunity for SOE’s to partner with such organizations to correct
problems of integration at societal and economic levels within their own organizations. Otherwise, the
changes become meaningless.
What is missing in the SAACE document is what they are doing to interest children from school level
upwards.
As an engineering association in partnership with any SOE to induct youth from school level upward
there is a lot more they can do to use their internal capacity to assist in developing the needed skills in
32
various engineering sectors. With the regional CESA and SAACE offices spread across the country, any
SOE stands a great a chance to attract the youth they want early on and allow the association to
design programmes that will yield greater results further down the line. It will also help an SOE to
produce a human capital plan that takes into consideration entry to senior levels of staff development
in several categories.
As earlier pointed out by the National Development Plan, very few people work in South Africa and
their standard of education (mainly black people) is poor.
As an association dealing mainly working mainly within the technical industry, they go on further to
state that transformation will be meaningful if and only it embraces the concepts of economic,
technical, intellectual and social empowerment, employment equity, skills transfer and sustainable
development. (See attached SAACE Transformation Charter).
Implicit in articulating the sentiments for change within this association is the understanding that the
association does not operate outside the society it services. The same should apply for the state
owned entities as they address the imbalances of the past within their organizations.
With such partners available to assist, the SOE’s can take these sentiments for change further than the
paper they are written on.
It will also allow the SOE’s to work closely with the industries that develop and nurture skills they
require for the development of their organizations – from apprentice level to executive levels. In
partnership with organizations like SAACE, they can be assisted with skills development plans, careerpath mechanisms and staff retention strategies that will foster partnerships that will reduce the
poaching of skilled human capital from one organization to another while growing more skills at the
bottom of the ladder.
In partnership with the industry partners, the transformation committee mandated with bringing in
changes that will impact the society and the economy at the same time responding to the needs of the
developmental state, in and through the SOE, will in this fashion, become aware of what is required to
stay ahead of its industry needs in terms of the cutting edge technologies and know-how to put it on
the global stage.
33
This requires a clear vision of where the organization is going and that is where the CEO will influence
the thinking and actions to taken to create the organization that will be knowledge-based and at the
same time deliver the requisite services to the majority. A tall order? Indeed.
7. Recommendations
This section on recommendations will be divided into two parts. The first part will be looking at what
could be done over a longer term, say 5 to 15 years to take us to the 2030 vision proposed by the
National Development Plan.
The second part of the recommendations will be focusing on what can be done on a short-term basis
to create an environment that will make the SOE’s part of the solution to the human development
challenge South Africa is facing at the moment. Short-term solutions by their nature are reactive. So,
there will be an acknowledgment that in the proposed solutions, there may arise other unforeseen
challenges.
7.1
Long-Term Proposals (up to 15 years and beyond)
7.1.1 Department of Public Entities (DPE)
These recommendations have been proposed with Executive Authority (DPE in this case) playing a key
role in taking control of the key mandates of the SOEs. This would be in line with the State-Owned
Assets Supervision and Administration Commission (SASAC) model of China. In the SASAC model, all
state-owned enterprises fall within this agency to ensure uniformity in delivery of the established
mandates.
Currently, at DPE, the model being proposed is serving only the largest and the most strategic SOE’s in
South Africa. These are: Telkom, Eskom, Transnet, Alexkor, PMBR, SafCol, Denel, Broadband Infraco
and SAA.
Recommendation #1: In time, over a period of about 5 years, it is proposed that all SOE’s be
centralized in one department in as far as their mandates are concerned. The implementation of their
programmes can still be delegated to their respective Departments. This will create what is currently
termed a super-ministry by the newspapers. The move is necessitated by the need to uniformise the
mandates of the SOE’s. Issues of policy may be centralized at this level whilst implementation is left
with the respective departments as already mentioned above.
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Within a centralized mandate of the SOE’s the creation of a division within DPE that will consolidate all
SOE human resources department reporting becomes critical. This will assist in consistent reporting
formats to ensure that quarterly monitoring is a requirement for all SOEs. At this point, DPE has taken
a lead in consolidating human resourcing within the dparatment for the strategic SOE’s but the same
can be proposed under the SASAC model which will take all SOE’s under one umbrella.
Recommendation #2: In this fashion, the HRD executives in each SOE, forming an SOE HRD Forum, will
become key partners in ensuring that the training that DPE has tasked itself with is carried out within
each SOE according to set formats. This can go a long way to assist the Ministry with effective policy
development in how best to pave a way forward for human capital development for current and future
needs of the SOEs.
Recommendation #3: The consolidation of sector-related SOEs with their respective HRD
requirements also give an exciting opportunity in crafting a knowledge-based future for our economy.
This can be done in partnership with our international counterparts in BRICS countries to capitalize on
the already established ties with the fastest growing economies in the world.
Recommendation #4: For senior executives, these partnerships create opportunities for secondments
that are state-funded. In this fashion, the executives start seeing opportunities for growth within the
entities beyond their five-year tenure. This has to be encouraged for executives who are perform well
to stay longer and build the organization as part of the strategic teams required to pass the skills to
new and upcoming entrants into the SOE.
7.1.2. National Planning Commission (NPC)
In Chapter 13 of its recommendations, National Planning Commission (NPC) outlined certain critical
challenges that have to addressed regarding the professionalization of the public service. The
inefficient and sluggish public service will undermine all other efforts that will be done to ensure that
clear mandates are not only understood but are also delivered upon. Because the SOEs appoint their
staff on a different mandate from that of public servants, sight has been lost to the fact that the same
staff is serving government. Alignment of SOEs with their mandates within DPE as pointed out above
will go a long way to bring the SOEs in line.
On human capital development, the NPC further points out that these specialist skills will never be
produced in adequate numbers without a clear strategy for training and recruitment.
This will need coordinated planning by government, in conjunction with training institutions and
professional councils and associations. This talks to the role to be played by the SETA’s, FET colleges,
35
the accredditing bodies like SAQA and QCTO.
Increased outsourcing has resulted in a reduced emphasis on more junior posts, yet without these,
there can be no production line for producing experienced professionals. This is a major problem. The
solution needs to start with apprenticeships, where new entrants can learn practical technical skills to
alleviate shortages of artisanal skills as pointed out earlier in the discussions. DPE has already
embarked on the plans being proposed by the NPC albeit at a smaller scale than is being
recommended in this paper.
Recommendation #5: Bursaries should be made available on a competitive basis for those apprentices
with the aptitude and inclination to engage in further formal training.
Recommendation #6: Graduate training schemes for those who lack necessary experience should be
linked to the longer-term staffing needs of departments, so that trainees have a clear sense of how
their career could develop if they perform well.
Recommendation #7: For apprenticeships and graduate training schemes to work effectively and
reproduce expertise across generations, experienced professionals in the same field need to mentor
trainees.
Recommendation #8: Where there is a shortage of such professionals within relevant departments,
innovative steps will need to be taken to locate suitable mentors. This could involve partnerships with
professional associations and firms, or employing retired professionals on a part-time basis.
Recommendation #9: In line with recommendations #7 and #8, in order to retain experienced
professionals, it will be important to have a specialist technical career path that enables individuals
with high levels of expertise to continue as practitioners, without having to divert into management
careers. This will enable retention of experienced professionals who can focus on project work and
training less experienced staff.
Recommendation #10: Those appointed to management positions that require professional expertise
should have sufficient technical knowledge, along with relevant management experience, to
understand the technical challenges faced by technical specialists and to secure their respect. At the
same time, support divisions such as human resources, supply chain, stores and systems should play a
supporting and enabling role to operational line management driven by professionals.
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7.1.3. Human Resources Development Council (HRDC) and the Green Paper on PostSchool Education and Training.
Formed in March 2010 and chaired by the Deputy President Montlante the HRDC, just like JIPSA
attempted in 2007, comprises a broad range of stateholders who have a keen interest in elevating the
debates and programmes addressing the skills shortage in key industries in South Africa. It has to be
understood that whilst this platform seems to be working effectively to even bring business on board,
not all SOE’s are taking advantage of this platform.
Recommendation #11: This platform stands a better chance to consolidate and coordinate, at a higher
level, all the parties with a similar interest in taking up the challenge of technical skills development
within the SOE’s. All SOEs participating in this forum will strengthen the HRDC and make it a body that
supports DPE in a far more effective manner than it is doing currently and also at a larger scale than it
is doing currently.
There will also be better reporting that will be linked to relevant industries in the country. This will keep
the SOEs in touch with their respective business counterparts so that each one feeds into the other’s
thinking in relation to skills development for the country as a whole.
The proposals and programmes at the HRDC are in line with the long-term provisions of the Green
Paper which offers an ambitious vision for growth in Higher and Further Education provision in order
to meet one of the country’s most serious challenges: the 3 million young people who are falling into
the gaps, facing long-term unemployment (p. 4). It is further education that faces the largest deficit
and requires the greatest intervention. Ambitious growth targets are set to remedy this situation: for a
1.5 million enrolment in higher education by 2030, and a 4 million enrolment in further education
These are participation rates of 23% and 60% respectively (p. 5).
The core focus of the Green Paper is therefore on employment and economic growth and how the
higher and further education system could best contribute to this national imperative. However, the
Green paper also places a strong emphasis on transformation and redress in the HE system.
Working hand in hand with the HE sector and relevant accreditation bodies, the HRDC has to expand
its offerings to all the SOEs. Currently their focus, as seen with DPE, is largely on the main SOEs. The
Human Resources Executives in the other SOEs outside DPE have to be encouraged to be part of the
HRDC as it has clearly laid out programmes to address the skills shortages in critical areas of our
economy.
The Green Paper further promotes the central role of ICT in delivering effective teaching and learning
37
and increasing institutional capacity in this regard. Of particular interest is the proposal that learning
resources should be made available as open educational resources (p. 57, 59), and the Green Paper
declares an interest in a government-managed development programme for open textbooks (p. 43;
60). In making this proposal, the document explicitly refers to the UNESCO initiative for the promotion
of OER policies in member nations.
Recommendation #12: In this regard, the SOEs stand a better opportunity to champion this call by
providing the resources like laptops, tablets (which can be sourced cheaply) and free access to the
internet for e-books and other similar amenities to their learners and apprentices. They can
immediately benefit from these innovations as early as they enter their learning programmes. These
could be shared resources as they can be housed within an SOE dealing with ICT and connectivity like
USAASA and SenTech. The CSIR has great capacity to improve connectivity in rural areas and their
expertise can be sourced in this respect.
Recommendation #13: This pilot with the Department of Basic Education, the CSIR in partnership with
and in collaboration with India South Africa can design pilot programmes for rolling out technology
based facilities to schools on a short to long-term basis. With their wireless capabilities in rural areas,
CSIR can take a few schools on such a project and grow from there. Using schools as bases for such
technologies can also allow small businesses in surrounding areas to benefit.
India is renowned for its ICT connectivity in rural areas. The programme on rural connectivity through
the ICT Rural Development Strategy placed in the Department of Communications can also paly a role
in facilitating the roll-out. There is room to effectively train youth in these technologies who in turn can
be deployed to roll out these technologies in their own areas. If this project works in rural schools,
urban schools will be much much easier to connect.
7.1. 5 Governance Structures within the SOE environment
7.1.5.1.
The Executive Authority (Ministerial Level)
As pointed out at 7.1. the Executive Authority sits at policy development level for HRD for all the SOEs.
Although the SOEs will be grouped according the their respective sectors, it will be key that the HRD
policy for each sector talks to the same deliverables in terms of their broader mandates. In this
manner, it will be easier to craft SOE specific key performance measures relating to a similar mandate
per sector.
Recommendation #14: The policy specialists at this level, serve to monitor human capital
development mandates are adhered to on a regular basis, preferably quarterly. The specialists in this
38
area will have to work closely with their business counterparts as it is done in German, Holland and
other parts of the world. This creates less competition and tensions between government and the
private sector. They start seeing each other as two sides of the same coin.
7.1.5.2.
The Auditor-General and SCOPA
The Auditor-General and SCOPA have played a key role in ensuring compliance with financial
management within government as a whole. They have recently realised that the task to monitor and
sanction those who deviate will be a difficult one if the necessary skills required for service delivery
are not given the attention they deserve. Money alone cannot solve the challenges the country faces.
Skilled people will.
Recommendation #15: It is important to suggest that the Auditor-General and SCOPA include human
capital development as part of their mandate to report on to ensure that the HODs adhere to this
requirement.
7.1.5.3.
The Portfolio Committee
Recommendation #16: The Portfolio Committee stands a good chance to champion the cause for
human capital development in the SOEs. The voice of the portfolio committee as a watchdog for
service delivery will carry a great deal of weight in parliament as this is one of the most pressing
matters facing the government of the day.
There are regular courses that are attended regularly by the parliamentarians in the portfolio
committees capacitating them with their mandates and what the Ministerial team is supposed to
deliver.
Recommendation #17: In these courses, what will need to be added are modules that will relate to the
challenges South Africa faces in each SOE sector regarding scarce skills. Many experts in these areas
can be called in on a regular basis to impart knowledge to the parliamentarians.
7.1.5.4.
The Board
As the Board of the SOE serves as the ultimate authority in carrying out the mandate of the SOE it has
to take responsibility for HRD and all its aspects within a given SOE.
Recommendation #18: Amongst its Committee at Board level, there is a Remuneration Committee
which deals with compensation of staff. There is an opportunity to create a Transformation Subcommittee at board level which will serves as an internal watchdog. This committee’s mandate is
similar to the Transformation Committee within the organisation, only it plays a monitoring role to
hold the CEO accountable to the deliverables in as far as meeting the required targets.
39
It is also within this committee that the targets are set in line with DPE requirements. It is also at this
level that the Minister will be asking critical questions of how and when the these board members see
a way forward.
Skills required at this level relate to thorough understanding of the SOE’s industry as it relates to South
Africa’s economy at large and the challenges facing the communities and the youth in the country.
Required also are astute business people who can translate policy to action within the shortest time
possible.
Recommendation #19: Because of their responsibilities in delivering on the mandate of the SOE, the
board members have a duty to learn as much as possible about the business they are in. Best practices
in each sector have been highlighted worldwide and the Board members have to take up opportunities
to learn about their latest trends in their business by taking trips to countries where the best is offered.
More than that, they have to understand not only the industry but how it can be used to better the
lives of the people at community levels. That is where the challenge lies.
7.1.5.5.
The Chief Executive Officer
The CEO with knowledge of the industry and the ability of translating policy to action will be a great
advantage. The ability of learning from other environments and importing that knowledge will work
well as the SOE boards can take bold steps to groom CEOs for the future within their industry by
sending promising staff overseas, mainly BRIC countries, for periods ranging from a 6-months to 12months. They will be bound by contracts to serve the organisation for an agreed upon period of time
when they return.
Recommendation #20: These promising individuals can be sent in pairs to any of our BRICS partner
countries with best practice in that particular sector so that they start forming knowledge-centres
within a given SOE.
Recommendation #21: CSIR can also host some of these knowledge-centres to support the SOEs in
this regard. These centres can grow as these staff members grow as future potential CEOs who will
have established world-wide networks to support them during their tenure in office.
This could be an on-going project within each SOE sector that will also allow exchanges amongst
partner countries to learn from one another.
40
7.1.5.6.
Human Resources Executive
The HR Executive will have to knowledgeable about the latest HR practices. The will be representing
the SOE at the forum for HRD executives at DPE. Not only will this executive be expected to
understand the latest HR practices, they will also have a complex task of looking ahead in terms of
what skills will be required as the organisation grows.
With the challenges South Africa is facing with staff in SOEs not possessing the adequate skills in their
industries, more resources will have to be allocated to train and retrain staff in all areas of the
business if it has to be competitive.
Recommendation #22: Like the CEO’s position, the HR executive will have to have a succession plan in
place to ensure that across the board, especially in critical skills areas, there is always some one or two
people who will be ready to fill in the positions for those retiring or leaving the organisation for one
reason or the other.
7.2
Short-Term Proposals (1-5 years)
As pointed out in the Green Paper on Post-School Education and Training, there are more that 3
million young people who are falling into the gaps, facing long-term unemployment. This is a grave
situation.
The SOE’s, even on a short-term basis, they stand a better chance than any unit to address this
challenge. A directive can be issued by the Minister to address this crisis of unemployed youth as a
‘state of emergency’ and set in place mechanisms to address it.
Recommendation #22: It will, however, take a great deal of coordination amongst the three main
bodies like DPE, the HDRC and the relevant SOEs to lay the foundation for this aggressive approach. If
such a project were to be systematically followed up and undertaken, it can take up at least 750,000
youth off the streets in a period stretching over 5 years. This is based on 300 SOEs each taking about
500 youth into their programme every year.
Whilst it is assumed that the majority of youth will be retained in these programmes, some will drop
out as expected in any programme of this kind. For those who remain in the programme and have
shown keen interest in self-development, there lies opportunities for them to participate in exchange
programmes with BRICS partners, even at an apprentice and artisanal levels.
41
What will be required is to train the youth with necessary skills relevant to that SOE but at the same
time they will need to be equipped with other life skills necessary for them to be absorbed into the
economy and beyond.
Recommendation #23: In addition, youth in these programmes will benefit a great deal if they were to
acquire what is seen as soft skills which are: resilience, emotional maturity, empathy, creativity,
leadership, negotiation, team working, willingness to learn, self-awareness and many more.
These skills are a new currency in the new world economies, particularly, the knowledge-based
economy.
8. Conclusion
The major of human capital development theme running throughout this concept paper addressed
the shortage of skills in the SOEs in an economy that has no choice but to move towards the
knowledge-based model. Challenges facing South Africa in this regard are no different from many
countries in search of for similar skills.
However, South Africa’s past of inequalities poses major stumbling blocks as we are still grappling
with issues of coordinating all state arms to help support our sentiments in addressing skills shortages.
In the SOEs the solution lies at grouping them into sectors that can work within a given mandate.
Secondly, and most critical, the Department of Enterprise (DPE), the Human Resource Development
Council (HRDC), SAQA and partners will play a major role as the coordinators for monitoring the
human capital development within these sectorised SOEs.
The impact of coordinating at DPE will be felt quicker as it will be serving as one-stop shop for human
captical development requirements for all SOEs at all levels from apprenticeship to executive
authority.
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